A new app promises to improve the rental market by filtering out bad tenants – but it’s unlikely to solve the dire situation in Cyprus.
The app is called the Tenant Credit Check Tool (TCCT), and it’s the brainchild of 28-year-old Christos Clerides – who, after several years living (and renting) in London and Amsterdam, came back to Cyprus and was shocked to find how little was expected of him as a prospective tenant.
“‘Let me know what you need from my side’,” he recalls asking the agent in charge of the property. “‘Job contract, pay slip – what do you need from me?’ And the agent replied, ‘Nothing. You’re a good guy. Just send me a deposit and the first month in advance’.
“And I was shocked,” Clerides told the Cyprus Mail.
His app aims to provide at least a cursory credit check, using Open Banking API’s – an EU-approved tool that creates a secure interface between banks and third parties, allowing the latter to access a customer’s bank data with the customer’s explicit consent.
“It only reads the data that are publicly accessible through those API’s,” says Clerides.
The process is easy enough. The prospective tenant gets an email notification from the platform (located at Proper Property, Clerides’ real-estate publication) asking them to provide details of their main bank account, the one they use for daily transactions, and consent to its data-mining for the previous three months.
The TCCT algorithm then has “read-mode access to those data, the data are not stored”.
A check is carried out, then “the landlord or the agent will receive a score. Just a score, nothing else, no words, nothing”. It’s not a ‘score’ in the sense of a rating, but a number – “1,000, let’s say” – representing the algorithm’s calculation of how much rent this person “is able to pay every month, based on the transactions”.
Credit assessments are nothing new, of course – but TCCT is fast and simple, specifically geared to the property market, and also differs in connecting directly to a subject’s bank account.
Clerides is at pains to emphasise that the app sees “not amounts, just transactions. The algorithm is not able to see numbers, due to GDPR…
“All the data is anonymised – no name, no description, no sensitive details.” It can’t read the customer’s income, or their bank balance.
What it is reading is the relationship between credit and debit transactions, he says – i.e. money in and money out – evaluating “if the money is stable”.
Asked directly how it’s able to come up with a number if it’s not seeing numbers – in other words, not seeing the value of each transaction – he repeats that “what it analyses is the flow and consistency of transactions. How steadily money goes in and out, and whether there’s a balance between credit and debit”.
That said, it’s unclear if the app will be compatible with local banks’ data protection policies.
Banking sources were emphatic that it’s not so simple, and that, even with the subject’s consent, GDPR and banking law require an impact assessment to take place before any personal data can be divulged to third parties – though their comments weren’t directed specifically at TCCT, with which they were unfamiliar.
How helpful will this new tool be?
“Imagine going from 0 to 1,” replies Clerides – meaning that, in the current situation of zero security, any security is “a huge step”.
But of course it says nothing about a person’s character, or their intentions. Having money in the bank is no guarantee that a tenant will be reliable.
“Definitely. You can be a millionaire, and [still] decide that ‘I’m not going to pay my landlord’.”
This is true, and goes to the crux of the issue. There’s a chronic problem with non-paying tenants, according to Kyprianos Theocharides, president of the Cyprus Land & Property Owners Organisation.
“We have many, many cases,” he told the Cyprus Mail, “where a person owns property, which is mortgaged to the bank. They rent to a tenant, the tenant doesn’t pay them, their plan was to use the rent money to pay their monthly instalment, they can’t pay the instalment – so the bank takes the property and liquidates it before they even manage to go to court and get the money.”
The massive obstacle, says Theocharides – and the reason why the situation is uniquely bad, even compared to other countries – is the extremely slow pace of the justice system.
Disputes between landlords and tenants are inevitable – “but if a dispute could go to court and be settled in 1-2 months, there wouldn’t be a problem. Unfortunately, what happens here is that it can take five years for your case to be tried”.
Dodgy tenants exploit the system by not paying rent, knowing that going to court is prohibitive, and of course eviction is impossible without a court order – never mind that, after five years, “it can take another two or three years for the police to execute the order,” adds Theocharides.
Legislation to deal with the problem has been slow in coming. The last significant change was in January 2020 when a law was passed making evictions easier in so-called ‘controlled’ properties, those older buildings subject to the Rent Control Law where a landlord’s hands are even more tied.
That’s a subject in itself – and, for instance, underlies the recent spate of collapsing balconies in Limassol, says Theocharides, a result of impotent owners left with no incentive to maintain the property.
Non-controlled properties are supposedly different, ruled by the free market – and the paradox is that places like Limassol, with its spiralling prices, are very much a landlord’s market.
You’d expect an app filtering tenants to be used by rapacious landlords seeking to weed out applicants who can’t afford their exorbitant rent – but instead it’s being promoted for the more modest purpose of trying to make sure they pay rent at all.
It’s unclear if the Tenant Credit Check Tool can make any difference, given all the flaws in the system.
“I believe it can help,” says Theocharides optimistically. “It’s important, and it’s useful – because when you’re renting something, and allowing someone into your property, it’s good to know who you’re dealing with.”
That’s the point, in the end – to know ‘who you’re dealing with’. Tech and apps offer reassurance but the relationship, like all relationships, will also be guided by what Clerides calls the current method of “handshakes and instinct” – presumably what that estate agent was relying on when he told him ‘You’re a good guy’.
His app “doesn’t replace human judgement,” confirms its developer.
“It just supplements it with data, so as to make the process more fair and transparent for both sides.”
